SINGAPORE (Feb 12): Year-to-date, the share price of UnUsUaL has plunged some 32% as the group was forced to postpone large-scale events such as the JJ Lin concerts in Australia and Hong Kong. Other events in Asia are also likely to be affected in tandem with the escalating coronavirus.
Yet, instead of flagging the group’s low share price as a point of caution for investors, RHB Group Research cites this to be an “opportunity for investors” to accumulate shares “at a more attractive price” for the longer-term holding.
In a Wednesday report, analyst Jarick Seet notes that the effects of the cancellation of Asian concerts are likely to be mitigated by the management’s strategy of shifting its focus to Western markets such as the US for the rest of FY2020.
“We expect the company to secure more new concerts with renowned Cantopop artists for 2020, as well as well-known family entertainment shows to further build on its 2020 pipeline,” says Seet.
Based on historical trends, Seet observes that UnUsUaL has worked with Disney for multiple family entertainment projects, and has presented some 48 Disney on Ice shows in South Korea and Taiwan.
“We believe that UnUsUaL will continue to expand its scope with Disney to promote more of their titles in Asia, especially in 2021,” says Seet.
“We also expect the company to continue exploring tie-ups and JVs to further expand its concert business globally, especially in the western markets and focus less on Asia to reduce the concentration risk of the novel coronavirus,” he adds.
Looking ahead, Seet envisions that UnUsUaL’s 3QFY2020 ended March should be a “strong” one due primarily to revenue contributions from JJ Lin’s two-night fully sold-out concert at the national stadium, which was also some four times the capacity of his concert back in 2018. In addition, Eric Chou’s concert is also expected to boost the group’s financial metrics for the quarter.
However, Seet opines that it will be 4QFY2020 that will bear the brunt of the virus outbreak as the group grapples with the postponement of JJ Lin’s Australia and Hong Kong concerts. The ongoing Hong Kong protests could also result in the group having to shelve some of its other events in the city, which could cumulatively result in a loss of income for the quarter.
“All in all, we expect the postponement of concerts to result in FY20F-21F to be cut by 23% and 23% respectively,” says Seet.
Nevertheless, the brokerage remains bullish on the short-term nature of the group’s setbacks. “The long term demand for concerts will continue to rise after the virus outbreak settles,” says Seet.
RHB is maintaining its “buy” call on UnUsUaL with a lower target price of 38 cents compared to the previous 42 cents. This represents an upside of 81% for the stock.
As at 11.19am, shares in UnUsUaL are trading 0.5 cent higher, or 2.5% up, at 20 cents. This implies a price-to-earnings (P/E) ratio of 14.8 times for FY20F according to RHB valuations.
